WITH THE ACQUISITIONS OF Elizabethtown Gas and Elkton Gas, South Jersey Industries (SJI) is the second largest natural gas provider in New Jersey, with service to more than 681,000 customers. From the standpoint of enterprise value, SJI is the third largest local gas distribution company in the United States.
“In 2015 we launched our vision for SJI, placing greater emphasis on our regulated businesses while simultaneously reducing our investment in non-core, non-utility assets,” explains SJI President and CEO Mike Renna. “The addition of these two great companies is perfectly aligned with our strategy.”
In this interview with COMMERCE, Renna addresses the key issues affecting SJI, from infrastructure upgrades to technology and from energy needs to safety, reliability and resiliency in its natural gas system.
Trends. “In New Jersey, we’re seeing the positive effect that increased access to affordable shale gas can have— delivering the headroom that allows for infrastructure improvements that enhance the safety and resiliency of our system. In a state with some of the oldest infrastructure in the nation, the low cost of natural gas delivers a tremendous benefit to our residents.”
Infrastructure. “South Jersey Gas’ system improvement efforts began with our first accelerated infrastructure program in 2009. Since then, the New Jersey Board of Public Utilities has approved several additional modernization programs, which will allow us to fully replace our remaining inventory of bare steel and cast-iron pipe, as well as upgrade the resiliency of parts of our system that may be more vulnerable to severe weather events.”
Improvements. “As a result of these programs, South Jersey Gas has safely replaced 842 miles of aging infrastructure and is on track to replace all remaining bare steel and cast iron in its system by 2021. These efforts have not only enhanced safety and increased reliability for customers, but they’ve also helped drive down emissions.”
Economic Development. “While we support the current administration’s commitment to carbon-free electricity by 2050, we recognize the critical role natural gas plays as we work to balance the state’s energy portfolio. Access to cheap natural gas remains a critically important bridge fuel in this effort. On both a local and national scale, I see the opportunity for natural gas to drive large scale economic development.”
Energy Policy. “Natural gas plays an important role in the New Jersey Clean Energy Program and the Governor’s Energy Master Plan. Working with the current administration in New Jersey and at the federal level, our intention is to simply ensure a balanced approach to the energy needs of our state and nation. We believe gas is key to achieving two critical goals—first, gas is critical to a balanced energy portfolio—one that does not rely too heavily on any one source, helps drive energy independence and recognizes the need to prioritize both environmental responsibility and cost effectiveness. And, second, abundant, inexpensive natural gas supports the goals and the economics of Governor Murphy’s Energy Master Plan.”
Technology. “Like many of our peers, we’ve committed to the installation of Excess Flow Valves across our system. In the event that a service line is accidentally breached, these small mechanical shut-off devices are designed to stop the flow of gas between the main and your meter. Technology is also revolutionizing our recordkeeping—paper records are being transferred to digital recordkeeping that will allow utilities to ensure the integrity of information and more quickly share it as needed to ensure the safety of all our residents.”
Extreme Weather. “Severe weather preparedness has been a major driver of our efforts to ensure resiliency. The impacts from storms such as Hurricane Sandy prompted a comprehensive dialogue, led by our elected leaders and regulators, around how we protect our customers in the face of future severe weather events. This dialogue spurred our Storm Hardening and Reliability Program (SHARP), under which we replaced the low-pressure infrastructure in coastal regions within our service territory. Upgrading this infrastructure to high pressure helps prevent water intrusion during severe storms that can impact these low-lying, more vulnerable regions. Through our SHARP program, we have already replaced 92 miles of main and renewed 11,090 services. Earlier in 2018, the New Jersey Board of Public Utilities approved a second phase of the program with a total investment level of approximately $100 million.”
Redundancy and Resiliency. “One of the biggest issues facing utilities is redundancy—the ability to maintain continuity of service in the event of unexpected supply constraint. We are working with our regulators to design plans that would mitigate both intermediate and longer duration constraints. We remain committed to bringing two critical pipeline projects to construction: our Cape Atlantic Reliability Project and the PennEast Pipeline.”
The Cape Atlantic Reliability Project. “In February 2017, the Pinelands Commission approved the South Jersey Gas application for the Cape Atlantic Reliability Project, which will support the conversion of the B.L. England electric generation facility in Beesley’s Point, Upper Township, New Jersey, from a coal- and oil-fired electric generator to a clean-burning natural gas generator—providing much needed electric supply to a highly constrained region. That decision by the Pinelands Commission has been appealed and remains in the state appellate court awaiting a decision.”
The PennEast Pipeline. “We are also an owner of the PennEast pipeline which, when operational, will supply New Jersey homes and businesses with some of the cheapest natural gas in the world. In fact, had PennEast been in operation in 2017, it would have saved [our region] more than $400 million in January alone, due to the extreme cold we experienced that month. In January 2018, the Federal Energy Regulatory Commission (FERC) issued a certificate of public convenience and necessity for PennEast. Right now, the FERC decision is being challenged in the courts. Once that proceeding is resolved, we will pursue the final state regulatory permits required to move the project to construction, and we remain optimistic that will occur in late 2019.”
The Big Picture. “Abundant and low-cost natural gas means jobs—from the construction and operation of new infrastructure to a return of manufacturing to the region––and we have an incredible opportunity right now to strengthen New Jersey’s economy.”